Magna Development Co. v. Reed

• Decision Date: 26 June 1964
• Citation: 228 Cal.App.2d 230,39 Cal.Rptr. 284
• Court: California Court of Appeals Court of Appeals
• Parties: MAGNA DEVELOPMENT COMPANY, a corporation, Plaintiff and Appellant, v. Hattie Belle REED and Florence Reed, Defendants and Respondents. Civ. 21317.

Page 284

39 Cal.Rptr. 284

228 Cal.App.2d 230

MAGNA DEVELOPMENT COMPANY, a corporation, Plaintiff and Appellant, v. Hattie Belle REED and Florence Reed, Defendants and Respondents.

Civ. 21317.

District Court of Appeal, First District, Division 1, California.

June 26, 1964.

David Freidenrich, Leonard Ware, Palo Alto, for appellant.

Wyckoff, Parker, Boyle & Pope, Watsonville, for respondents.

MOLINARI, Justice.

This is an appeal by plaintiff from a summary judgment in favor of defendants. The question presented is whether the trial court was justified in granting the motion of defendants for a summary judgment. The consideration of this question turns essentially upon whether a subordination clause in an agreement for the sale of real property is uncertain as a matter of law.

The Record

Plaintiff's second amended complaint for specific performance alleges that on January 4, 1962, plaintiff and defendants entered into a written agreement wherein defendants promised to sell to plaintiff and plaintiff promised to purchase from defendants certain described real property. It is further alleged that the agreement provides that plaintiff will pay no money down but will execute its promissory note payable to defendants for the amount of the purchase price with interest thereon at the rate of 6 percent per annum payable semiannually; that the note is due and payable at the end of 5 years from its date unless defendants desire to have the note run for an additional 5-year period in which event the interest shall continue at the same rate and the principal thereof shall be payable in 5 equal annual installments during the 5-year period; and that said note is secured by a deed of trust to said property in which plaintiff is the trustor and defendants are the beneficiaries. It is also alleged that the purchase price of the land is $27,125, and that the Division of Highways of the State of California recently acquired comparable property for about one-half of the purchase price described therein; that in addition to the purchase price, plaintiff agreed to pay interest to defendants on any unpaid balance at the rate of 6 percent per annum; that the purchase price mentioned in the agreement is equal to the value of the real property and therefore it would not be inequitable to enforce the terms of the agreement. A further allegation recites that plaintiff has fully performed under the agreement but defendants have failed and refused to perform thereunder and so advised plaintiff in writing on February 2, 1962. Plaintiff prayed for specific performance of the agreement, or, in the alternative, for damages caused it by reason of defendants' alleged breach.

Defendants filed their answer wherein they admitted the execution of an agreement with plaintiff (a copy of which is attached thereto and incorporated by reference), and their failure and refusal to perform said agreement. The answer alleges that defendants advised plaintiff of such refusal by letter dated February 2, 1962. In other respects defendants' answer generally denied the material allegations of the complaint.

Thereafter defendants moved for a summary judgment on the following grounds: (1) that the terms of the alleged contract sought to be specifically enforced are not sufficiently certain to make the precise act which is to be done clearly ascertainable; (2) that defendants have not received an adequate consideration for the contract; (3) that said contract is not, as to defendants, just and reasonable; and (4) that said action is without merit. In support of said motion defendants filed a declaration wherein each stated that she is one of the parties who signed the contract attached thereto marked 'Exhibit A'; ¹ that this contract is the one referred to in plaintiff's second amended complaint; and that the facts stated are within her personal knowledge, and if sworn as a witness she can and will testify competently thereto.

Plaintiff filed a counteraffidavit, executed by Harry H. Hicks, Jr., the substance of which is as follows: that he is Secretary-Treasurer of plaintiff corporation; that as an officer of said and similar corporations engaged in land development and construction for the past 10 years, he was acquainted with the customs in the building industry, and particularly with respect to construction loans; that the practices and customs in the granting of construction loans, including the length of term of said loans and the interest rate are fairly standardized; that the amount of said loans is customarily 60 percent of the value of the improvements to be erected, together with appraised value of the land upon which said improvements are to be placed; that the rate of interest is the prevailing rate in said locality at the time of making said loan and the length of the term of said loans customarily does not exceed 5 years; that the customs and practices in the making of said construction loans will be testified to at the time of trial.

The affidavit also avers that if the court believes that the subordination provision does, as a matter of law, make the contract uncertain, plaintiff is willing to delete this provision so that the deed of trust provided for therein will not contain a subordination clause; that said contract provides for no money down for the reason that defendants themselves did not wish to receive any down payment but desired as much interest as they could obtain; that the more money due on the contract the larger the payments of interest would be; and for this reason alone no money was paid down to defendants; that defendants' contention that said contract is unreasonable cannot be determined at this stage of the proceedings on the unilateral assertion of defendants or as a matter of law.

The motion for summary judgment was thereupon submitted; and, pursuant to an order granting the same, a judgment in favor of defendants was signed and entered. On this appeal from said judgment plaintiff does not question the sufficiency of the moving affidavits, but asserts that the parties have raised issues which can be resolved only by presentation to, and a decision by, the trier of the facts.

It is apparent that defendants' motion seeks a determination that as a matter of law the subject agreement is invalid on the ground that it is uncertain; that the consideration therefore is inadequate; and that it is not, as to them, just and reasonable. The supporting affidavits tender no factual issues but purport to serve merely as a vehicle to bring before the court the agreement in question. They do not, however, include the subject contract as an exhibit but refer to the copy attached to plaintiff's second amended complaint. It is apparent, therefore, that the proper remedy for defendants was to move for a judgment on the pleadings since the court was merely called upon to determine the validity of the agreement as a matter of law from a consideration of the face of the pleadings. Accordingly, none of the basic principles controlling judicial action in granting or denying a summary judgment need to be restated here because we are not concerned with the sufficiency of the affidavits, but with the sufficiency of the second amended complaint to state a cause of action. It is well established, however, that where no triable issues are presented, and the sole remaining question is one of law, that question may appropriately be determined on a motion for summary judgment. (Wilson v. Wilson, 54 Cal.2d 264, 269, 5 Cal.Rptr. 317, 352 P.2d 725; Goldstein v. Hoffman, 213 Cal.App.2d 803, 811, 29 Cal.Rptr. 334; Enos v. Foster, 155 Cal.App.2d 152, 157, 317 P.2d 670.)

It is apparent in the case at bench, from a reading of the trial court's 'Memorandum Decision,' that it considered the determination presented by the subject motion a question of law. It is there stated that the court 'finds that the purported contract entered into is uncertain and unreasonable as to sellers.' ² We are relegated upon this review, therefore, to a determination of whether the trial court was justified in granting what is tantamount to a judgment on the pleadings. The provisions of the subject contract pertinent to our inquiry are set out in the footnote. ³

Is the Contract Uncertain?

Yes. The trial court predicated its determination of uncertainty essentially upon the subordination provision with respect to the deed of trust provided for in the contract, and concluded that 'The only consideration and obligation of buyer provided in the contract is a note secured by a Deed of Trust against the property sold and this obligation may be subordinated to a construction loan without any provision being made in the contract for the amount of the loan, its term or the interest rate to which sellers' Deed of Trust might become subject.'

The modern trend of the law is to favor the enforcement of contracts, to lean against their unenforceability because of uncertainty, and to carry out the intentions of the parties if this can feasibly be done. (Burrow v. Timmsen, 223 A.C.A. 304, 309, 35 Cal.Rptr. 662.) It is well established, however, that where a party seeks specific performance of a contract, the terms of the contract must be complete and certain in all particulars essential to its enforcement. (Bonk v. Boyajian, 128 Cal.App.2d 153, 155, 274 P.2d 948; Colorado Corp., Ltd. v. Smith, 121 Cal.App.2d 374, 376, 263 P.2d 79; Berven v. Miller, 86 Cal.App.2d 39, 40, 194 P.2d 80; Civ.Code, § 3390, subd. 5.) An agreement for the sale of real property will not be specifically enforced unless it not only contains all the material terms, but also expresses each in a reasonably definite manner. (Roberts v. Lebrain, 113 Cal.App.2d 712, 716, 248 P.2d 810; Bruggeman v. Sokol, 122 Cal.App.2d 876, 881, 265 P.2d 575; Buckmaster v. Bertram, 186 Cal. 673, 676, 200 P. 610.) These principles have been applied in denying specific performance of agreements which are incomplete, indefinite or...